Legal aid U-turn 'will penalise the innocent'

Amy Winehouse arriving at court on the second day of her assault trial in 2009. She was acquitted and £68,000 she incurred in defence costs was refunded to her. Photograph: Neil Mockford/Getty Images

Innocent people will be forced to pay thousands of pounds for their own defence lawyers after a controversial coalition U-turn on legal aid.

The move, which lawyers' organisations claim puts a price on justice, comes at a time of mounting concern over cutbacks proposed by the Ministry of Justice. Clause 52 in the legal aid and sentencing bill removes the right of defendants to have the "reasonable" costs of hiring their own lawyer reimbursed if they are found innocent.

The plan was first drawn up by the previous Labour government, but was scrapped in the face of Tory opposition. The attorney general, Dominic Grieve, the solicitor general, Edward Garnier, and justice ministers Jonathan Djanogly and Crispin Blunt all opposed the plan, and signed an early day motion against it in October 2009. But their decision now to back a similar proposal has alarmed justice groups. which have branded it a U-turn.

"We are deeply disappointed that this government is trying to bring this back," said Robert Khan, head of law reform at the Law Society. "It is wrong in principle that the acquitted person should then have to pay the costs of their defence for the temerity of proving their own innocence."

Ministers expect to save £40m under the proposals. More than one million defendants who appeared before magistrates courts in 2008 did not receive legal aid, meaning the estimated tens of thousands subsequently found innocent would have lost out financially.

The government claims the move will put an end to the taxpayer writing out large cheques people such as Nick Freeman, the lawyer known as "Mr Loophole", who regularly gets clients off speeding offences. Millionaire celebrities who are found not guilty would also no longer receive reimbursements. England midfielder Steven Gerrard received £311,000 in legal aid after he was acquitted of affray, while singer Amy Winehouse had £68,000 returned after being acquitted of hitting a fan.

A Ministry of Justice spokesman said: "We need to strike a fair balance between refunding costs to people who are found not guilty and protecting the taxpayer from ending up paying a bill for costs which are either overly expensive or not necessary."

But the Law Society claims the new measure will affect far more people than motorists and millionaires.

Currently, section 16 of the Prosecution of Offences Act 1985 gives courts the power to award costs that are "reasonably sufficient to compensate the defendant for any expenses which he has properly incurred in the proceedings".

The last government wanted to introduce a scheme that limited these costs to legal aid rates, which would mean those who hired their own lawyers would be able to reclaim only around a quarter of their estimated costs.

Opposing the plan in a speech to parliament last year, the Tory MP Henry Bellingham, a barrister, argued that it was "fundamentally unfair and wrong" because it breached "a key principle of 20th-century criminal justice – that if a member of the public who is charged with a criminal offence seeks private representation in court and is subsequently acquitted, his or her reasonable costs will be met from central funds".

But clause 52 will now provide the lord chancellor with a power to cap the amounts courts in England and Wales can award at legal aid rates.

Sound Off for Justice, which opposes the move, claims that because legal aid rates are "very low" many defendants will experience a significant shortfall. In a typical medium-sized case in the crown court, for example, the estimated loss for someone found innocent who has hired their own lawyer will be up to £20,000. In more complicated cases, it will be far greater.

Clause 52 threatens to be a divisive issue for the government, putting it at odds with the judiciary and many MPs. The Law Society was successful in seeking a judicial review of the previous government's plans. Explaining its decision, the high court warned the plan meant "that a defendant falsely accused by the state will have to pay from his own pocket to establish his innocence".

Following the ruling, the ministry decided that it would not appeal against the judgment, but the coalition's decision to reintroduce the measure is likely to trigger fierce debate in parliament.

The move is part of wide-ranging initiatives to curb the Ministry of Justice's budget. Lawyers have previously raised concerns that under clause 12 of the bill the government could grant itself powers that would see the abolition of the universal right to a solicitor on arrest. Those arrested would be subject to means testing, a development that has alarmed legal campaigners who warn it removes a cornerstone of justice.

The government has also signalled that it plans to expand the use of legal advice telephone lines to replace solicitors who dispense advice face to face. The government claims that CDS Direct, the helpline that provides advice to detainees at police stations, offers "a proven high-quality cost-effective service". But the use of third party companies has raised concerns among some lawyers who question whether they offer value for money.